Correlation Between Liuzhou Chemical and Guangzhou Zhujiang
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By analyzing existing cross correlation between Liuzhou Chemical Industry and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Liuzhou Chemical and Guangzhou Zhujiang and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Liuzhou Chemical with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liuzhou Chemical and Guangzhou Zhujiang.
Diversification Opportunities for Liuzhou Chemical and Guangzhou Zhujiang
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liuzhou and Guangzhou is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Liuzhou Chemical Industry and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Liuzhou Chemical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Liuzhou Chemical Industry are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Liuzhou Chemical i.e., Liuzhou Chemical and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between Liuzhou Chemical and Guangzhou Zhujiang
Assuming the 90 days trading horizon Liuzhou Chemical Industry is expected to generate 2.32 times more return on investment than Guangzhou Zhujiang. However, Liuzhou Chemical is 2.32 times more volatile than Guangzhou Zhujiang Brewery. It trades about 0.12 of its potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about -0.01 per unit of risk. If you would invest 305.00 in Liuzhou Chemical Industry on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Liuzhou Chemical Industry or generate 6.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Liuzhou Chemical Industry vs. Guangzhou Zhujiang Brewery
Performance |
Timeline |
Liuzhou Chemical Industry |
Guangzhou Zhujiang |
Liuzhou Chemical and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Liuzhou Chemical and Guangzhou Zhujiang
The main advantage of trading using opposite Liuzhou Chemical and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liuzhou Chemical position performs unexpectedly, Guangzhou Zhujiang can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Guangzhou Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.Liuzhou Chemical vs. Zijin Mining Group | Liuzhou Chemical vs. Wanhua Chemical Group | Liuzhou Chemical vs. Baoshan Iron Steel | Liuzhou Chemical vs. Rongsheng Petrochemical Co |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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